Samsung Calls Note 7 Recall Cost to Company 'Heartbreaking'

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The president of Samsung has confessed that recalling 2.5 million of its Galaxy Note 7 smartphones will cost the company a "heartbreaking amount".

According to Bloomberg, the comment came on Friday when the head of Samsung's mobile business Koh Dong-Jin was asked by reporters about the financial impact of having to recall the phones, following the discovery of a defect in the batteries that caused some handsets to explode while charging.

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Some analysts forecast that the scale of the recall will cost Samsung anything between $1 billion and $5 billion in revenue. Given that Samsung's projected net income is $20.6 billion this year, the firm will undoubtedly absorb the loss. But Dong-Jin's comment could just as easily refer to the cost to the company's manufacturing reputation in its rush to beat Apple's iPhone 7 to market.

In Samsung's haste to beat Cupertino to launch, beginning last year the South Korean firm had brought forward the release of its Galaxy S and Galaxy Note series models by roughly a month. The move was initially deemed a success after it helped Samsung report on its best profit in more than two years, but the strains on its supply chain appear to have backfired disastrously.

"Samsung might have over-exerted itself trying to pre-empt Apple, since everybody knows the iPhones launch in September," said Chang Sea-Jin, business professor at Korea Advanced Institute of Science and Technology and author of Sony vs. Samsung, a history of the electronics giants.

Speaking to Reuters, Sea-Jin called the recall "an unfortunate event; it feels like Samsung rushed a bit, and it's possible that this led to suppliers also being hurried."

Samsung said in a statement to Reuters that it conducts "extensive preparation" for its products and will release them to the market "only after proper completion of the development process".

However, many view the recall as a gift for Apple, which is currently dealing with depressed phone sales and relatively lukewarm anticipation for this year's devices as analysts speculate the company is holding back its most impressive upgrades for 2017.

Indeed, since news emerged of Samsung's mass battery defect, Apple has alerted iPhone parts suppliers to increase production rates, suggesting the company is confident of a late surge in sales of its latest flagship smartphones.

"The time advantage that [Samsung] had on the iPhone, that's evaporated now," said Bryan Ma, an analyst at IDC in Singapore. "It'll hit them this quarter obviously, but if it's something they immediately address and immediately turn around, then there won't be a long-term impact."

With Apple said to be overhauling its mobile design for a tenth anniversary "iPhone 8", and Samsung clearly keen to bounce back and impress after its latest troubles, everything points to 2017 being potentially one of the most ultra-competitive years the smartphone industry has ever seen.

Top Rated Comments

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51 months ago
Meanwhile, in Cupertino:

Score: 57 Votes (Like | Disagree)
Avatar
51 months ago

They could just release the Note 5 all over again, it trumps the iPhone either way.

Not in a million years. Even the current iPhone 6S makes mincemeat of most other phones/phablets in regards to performance.
Score: 22 Votes (Like | Disagree)
Avatar
51 months ago
"Give Samsung credit." Oh man. Of course they acknowledged and recalled them, there's a physically dangerous risk. It would be criminal not to. Nobody "gives credit" to car manufacturers or companies that make baby products when they recall their stuff. It's something they NEED to do.

I'd give Samsung credit if they avoided this altogether and made sure their batteries didn't explode in the first place. And no, I'm not saying Apple handles their product issues perfectly. Far from it. But Samsung does not deserve to be praised for having a recall. Good lord.
Score: 18 Votes (Like | Disagree)
Avatar
51 months ago

First with what? The Note 7 already does stuff and/or has features even the iPhone 8 won't have. :rolleyes:

Yeah, like that whole exploding battery feature. Can your iPhone do that?
Score: 17 Votes (Like | Disagree)
Avatar
51 months ago

Karma might be a bitch, but Apple could learn something from this.

Yeah, Apple certainly could learn something! Next time Apple rush production to undercut the new Samsung phone, without appropriate quality testing, leading to not identifying issues with phones exploding... :rolleyes:

Let me guess, you'll quote the 2011 dGPU failures or something, as pointing to Apple not doing a similar thing?

So many posters are out of touch with how the real world/businesses work. What Samsung have done in this situation is fully consistent with what all businesses would do. Samsung have not done anything out of the ordinary; well, other than releasing exploding phones.
Score: 16 Votes (Like | Disagree)
Avatar
51 months ago

First with what? The Note 7 already does stuff and/or has features even the iPhone 8 won't have. :rolleyes:

And iPhones have features no non-iOS device will ever have, what's your point?

Let's whip out our spec sheets and compare shall we? :rolleyes:

Honestly, sometimes I see the tech fans as having the same "my truck has bigger tailpipes" mentality that I find so sad in people. Get the device that has the features you want/need.
Score: 14 Votes (Like | Disagree)

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